Nebraska's stringent not-for-profit hospital sales law might have scared away the nation's largest for-profit chains, but it didn't frighten Vikram.
Vikram, based in Kearney, Neb., is owned by a cardiologist and named for her 9-year-old son.
On Oct. 10, the company acquired 18-bed not-for-profit Sargent (Neb.) District Hospital and became the first for-profit company to cut such a deal under the state's hospital sales law.
The hospital has lost more than $553,000 since 1994, more than half of that last year.
After managing Sargent for more than a year and spending a "substantial amount" of her own money to do so, 37-year-old Rajitha Goli, M.D., said buying the small hospital was the only way to keep it alive.
But Goli needed permission to do that because Nebraska was the first to mandate state approval of the sale of not-for-profit hospitals to for-profit buyers (May 20, 1996, p. 40). Sargent was owned by Sargent Hospital District, a not-for-profit corporation controlled by a locally elected five-member board.
The Nebraska attorney general signed off on the deal in August, and the state Department of Health and Human Services approved it in September.
Hospital board Chairman David Kirkpatrick said the sale to Goli, who also owns a heart clinic in Kearney, was welcomed.
"These people in this area are entitled to healthcare," Kirkpatrick said.
For some, he added, the nearest hospital in Custer County is more than 30 miles away. "In the wintertime, that can be a long ways," Kirkpatrick said.
According to state documents, the hospital had a purchase price of $609,175, which included Goli assuming the accounts payable and any cash advances she had made to the hospital. Because the hospital was in a financial hole, Kirkpatrick said that meant no money changed hands.
Goli declined to discuss financial details.
When Goli applied to the state to buy the hospital, she projected she could get the hospital out of the red in three years. Because little change in the patient and payer mix at the hospital is expected, the state said it's unlikely inappropriate referrals will be made to the doctor-owned hospital to make it more profitable.
Goli said she has one doctor, a nurse and other support staff at the hospital, which has been renamed Goli Medical Center. She said administrative costs are low because she handles those duties, making the 70-mile trip at least once a week from her Kearney clinic.
"Management of a hospital can be done long distance," Goli said.
She said between nine to 11 beds are usually occupied at the hospital.
"I made a commitment to the community that I was going to keep the hospital open," she said.
Nebraska has 107 hospitals. Besides Goli, there are two other for-profits, including 284-bed St. Joseph Hospital in Omaha. It's owned by Santa Barbara-Calif.-based Tenet Healthcare Corp.
Nashville-based Quorum Health Group is selling 160-bed Midlands Community Hospital, Papillion, to Alegent Health, a not-for-profit system based in Omaha. The sale is effective Nov. 1.